CareTech Holdings PLC

Interim ResultsFor the six months ended 31 March 2014

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Presentation Structure

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PRESENTERS: Farouq Sheikh, Chairman

Michael Hill, Group Finance Director

AGENDA

OUR BUSINESS AND THE MARKET: Overview

About CareTech

The Journey So Far…

Growth Since IPO

Group Highlights

Direction of Travel

CareTech - Core Strengths

Our Business

Range of Services

INTERIM RESULTS: Financial Highlights

Services Revenue and EBITDA Split

Non Underlying Items

Cash Flow Highlights

Balance Sheet Highlights

SUMMARY

Overview

• Another set of solid results

• Underpins the Board’s strategy of diversification over recent years

• A Sound platform

• A defensive business

• Growth attributes

• Asset backed

• Increasing dividends

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About CareTech

• The leading specialist provider of social care for children and adults with complex needs

• Founded in 1993

• Floated on AIM in 2005 and progressively grown from 423 places (at float) to 2,116 on 31

March 2014

• Highly visible long term income stream with strong asset backed balance sheet

– Freehold property portfolio of 164 homes independently valued at £275m in August 2013

• National profile supported by a strong regional structure for service delivery

• Client focused innovative care pathway approach

• Strategy of investment in organic growth and selective acquisitions which enhance core

services

• Dedicated specialist support growth

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The Journey So Far………..

Market Size at IPO

Market Size Today

One Focussed Operating Division

Residential and Day Care Services

For Adults with Learning Disabilities

Five Specialist Operating Divisions

Adult Services

1. Adult Learning Disability

2. Mental Health

Young People & Families

3. Young People Residential Services

4. Fostering Care

5. Learning Services

Market Size £3.0bn

Capacity 423 (2005)

CareTech Share <1%

Market Size £9.0bn

Capacity 2,116 (31 March 2014)

CareTech Share <2%

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6

Growth since IPOSeptember 2005 to September 2013

423

2,116

0

1000

2000

3000

2005 2013

Capacity

£23m

£114m

0

40

80

120

2005 2013

Revenue

£2.4m

£26.4m

0

10

20

30

2005 2013

Underlying EBITDA

4.1p

27.43p

0

10

20

30

2005 2013

Diluted EPS

40% Annual Compound Growth Rate 31% Annual Compound Growth Rate

Group Highlights

• Solid performance, reflecting further development of our care pathway range of services:

- Revenue at £61.5m up 9% - Underlying EBITDA at £13.9m up 18%

- Net Assets have increased by £26m up 34% - Underlying PBT at £8.5m up 12%

• Strong cash generation and increased dividend

• Capacity at 31 March 2014 is 2,116 unchanged from September 2013

• Excellent occupancy levels maintained

- 92% in established services - 84% including facilities undergoing development

• Senior management team strengthened with expertise in both Supported Living + Clinical

• Fee rate changes are slightly positive and expected to remain positive for the remainder of this year

• In November 2013 EQL Solutions was acquired which extends the support pathway

• Scotland platform extended into additional Childrens Residential Services and Fostering

• An increased emphasis on the quality of care provision through the activities of the Care Governance and

Safeguarding Committee

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Direction of Travel

Adults LD78%

Young People

10%

Fostering8%

Mental Health

4% 2010

-

5.0

10.0

15.0

20.0

25.0

Adults LD YoungPeople

Fostering MentalHealth

EQL

2010

20102010

2010

2014

2014

2014

2014

2014

Growth 18% 173 % 115 % 140 % 100%

Adults LD60%

Young People

20%

Fostering12%

Mental Health

7%EQL1%

2014

EBITDA

£22.4m

ConsensusEBITDA

£31.0m

CareTech - Core Strengths

• Experienced and committed management team

– A professional team with an impressive track record

– Sharp market awareness and innovative care pathway approach

– Our credibility is strengthened by a caring approach, integrity and sound financial acumen

• Scalable platform

– National profile supported by a local structure for service delivery

– Demographics favour growth and offers market penetration opportunity

– Growth stems from capacity increase not fees

• Financial stability

– Highly visible long term income stream

– Robust free cash flow

– Strong asset backed balance sheet

– High acuity care that’s non discretionary

• Care governance and high quality standards

– Safeguarding is critical and our highest priority

– Unique Care Governance and Safeguarding Committee at board level

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Our Business

CareTech Holdings plc

Adult ServicesResidential

Careand

CommunitySupport

Mental Healthand

SpecialistServices

Residential Care and

Education of Children

Fostering Learning Services

Corporate Direction and SupportIncorporates the Shared Services Centre, Human Resources, National Training Centre, Quality, Regulation and Compliance, Treasury and IT

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Range of Services and Geographical Coverage

Adult Learning

Disabilities

• Residential care

• Independent supported living

• Community support services

• Transitional Services

1,430

Mental Health • Residential care

• Low secure and step down

• Independent supported living

• Community outreach

150

Young People

Residential

Services

• Residential care of children

• Transitional Services

153

Foster Care • Fostering 383

2,116

Care Pathway

31 March 2014

Capacity

Capacity at 31 March 2014 – 2,116 places

Capacity: 1,430 places

Occupancy: 86%

Average weekly fee: £1,161

Turnover: £36.6m

EBITDA: £10.0m

31/03/2014

Adult Learning Disability

• Market

– 1.4m people in the UK have a learning

disability

– 185,000 of these cannot live independently

– UK market for adult residential LD and

Supported Living worth £5.9bn

– 5.5% p.a. market growth rate

– Highly fragmented

– CareTech has less than 2% market share

– High demand for community based care and

high value specialist residential services

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Young People Residential Services

• Markets

– 16,000 children in England looked after

outside foster care

– Residential children’s market across

England worth £1.0bn

– 5.7% p.a. market growth rate

– Highly fragmented

• Fees range considerably

– The higher the specialism and staffing

ratios, the higher the weekly fee

– Many placements at ACAD, Branas and

Greenfields are at £4500+ per week

Capacity: 153 places

Occupancy: 77%

Average weekly fee: £3,276

Turnover: £10.6m

EBITDA: £3.8m

31/03/2014

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Fostering

• Market

– Every 22 minutes a child comes into care

– 67,050 “Looked After” Children in England

(and rising)

– 50,260 placed in foster care (An increase of

3.7% from 2011)

– 35,260 placed within Local Authority foster

care (A reduction of 3% from 2011)

– The Independent Fostering market is worth

approx £1.1bn

– CareTech is a top 5 provider with a 2%

market share

– Through the Children and Families Bill in

English LA’s are to be given funding to 21

for Young People in Foster Care

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Capacity: 383 places

Occupancy: 81%

Average weekly fee: £803

Turnover: £6.6m

EBITDA: £1.5m

31/03/2014

Mental Health

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• Market

– 2.4% of the UK population will be referred

to a specialist psychiatric service

– NHS/LA total spend on mental health is

£14.4bn (2010)

– Independent sector share is £1.2bn

representing 7.6% market share

– 70% of prisoners have mental health

problems

Capacity: 150 places

Occupancy: 87%

Average Weekly fee: £1,160

Revenue: £3.7m

EBITDA £1.2m

31/03/2014

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Learning Services

Acquired EQL Solutions in November 2013 out of the administration of Elmfield Training

Business Overview

• Market leading provider of pre-employment training and work based learning (WBL)

• Revenue Sources for 2013/14 and 2014/15– Skills Funding Agency (SFA) contracts

– Employer contracts with the SFA – Barclays, Phones 4 U and Weatherspoons; recent gain with Paddy Power

– Skills Development Scotland + Welsh Assembly

• Two major streams are being developed– Pre-employment and Apprenticeships for CareTech staff (3,500)

– Pre-employment and Apprenticeships for CareTech service users (2,000)

• Income in the 5 months to 31 March 2014 £3.8m

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Financial Highlights

Financial

• Revenue increased by 9% to £61.5m (HY 2013: £56.6m)

• Underlying EBITDA increased by 18% to £13.9m (HY 2013: £11.8m)

• Underlying PBT increase of 12% to £8.5m (HY 2013 : £7.6m)

• Underlying Diluted EPS increase by 11% to 13.07p (HY2013:

11.82p)

• Underlying Operating cash inflow of £13.1m (HY2013: £10.9m)

• 94% cash conversion ratio

• Interim dividend up by 12% to 2.60p (2013: 2.32p)

• Net debt at £165.7m (2013: £133.2m)

Operational

• Extending care pathway range of specialisms into

fostering, family assessments, EBD and MH hospital

• Extended geographical reach into Scotland

• Invested in acquisition/development infrastructure and I.T.

Systems

• High quality ratings

• Senior Management team strengthened

• August 2013 – Property Business Combination

• November 2013 – EQL Solutions Acquisition

2014

Revenue

£m

2014

Underlying

EBITDA

£m

2013

Revenue

£m

2013

Underlying

EBITDA

£m

Adult Learning Disabilities 36.6 10.0 36.8 8.3

Mental Health 3.7 1.2 3.1 1.0

Sub Total 40.3 11.2 39.9 9.3

Young People Residential Services 10.6 3.8 9.2 2.9

Foster Care 6.7 1.5 7.5 1.9

Sub Total 17.3 5.3 16.7 4.8

Learning Services 3.8 0.0 0.0 0.0

Sub Total 61.4 16.5 56.6 14.1

Less Unallocated Group Costs (2.6) (2.3)

Total 61.4 13.9 56.6 11.8

Margin 22.6% 20.9%

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Service Revenue & EBITDA Splitfor the six months ended 31 March 2014

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Non Underlying Items• The disclosure of certain current and non-current liabilities has been enhanced and more clearly demonstrates their future

impact on net debt. IFRS also requires changes in acquisition fair values to be restated for the prior period.

• Adjustment items charged / credited in the Income Statement are as follows:

Six months ended

31 March 2014

£’m

Six months ended

31 March 2013

£’m

Acquisition Costs (0.3) -

Integration, Reorganisation Costs and Redundancy costs (0.9) (0.8)

Adjustments for Minimum Future Lease Payment Uplifts (0.8)

EBITDA Adjustment Items (1.2) (1.6)

Amortisation of Intangibles (1.8) (1.8)

Charges Relating to Derivative Financial Instruments 0.1 (0.7)

PBT Adjustment Items (2.9) (4.1)

(i) EBITDA is operating profit stated before depreciation, share-based payments charge and adjustment items(ii) Profit before tax and diluted earnings per share are stated before adjustment items

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Cashflow Highlightsfor the six months ended 31 March 2014

2014

£m

2013

£m

Operating Cashflow before Adjustments 13.8 11.8

Decrease/(Increase) in working capital (0.7) (0.9)

13.1 10.9

Acquisitions & Capital Expenditure (3.3) (3.7)

Interest, Dividend & Tax Paid (3.6) (6.6)

Treasury & Acquisition Related Costs (3.4) (2.6)

Decrease / (Increase) In Net Debt 2.8 (2.0)

Opening Net Debt (168.5) (131.2)

Closing Net Debt (165.7) (133.2)

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Balance Sheet Highlightsas at 31 March 2014

2014

£m

2013

£m

Tangible Fixed Assets - £275m Val’n 239.3 192.6

Goodwill and Intangibles

Net Debt

67.4

(165.7)

63.0

(133.2)

Other Liabilities (Net) (37.8) (45.2)

Net Assets 103.2 77.2

Actual 2014

EBITDA: INTEREST 3.83 times

NET DEBT: EBITDA 5.3 times

LOAN: VALUE 63%

Summary

• An executive team that inspires confidence and whose interests are closely aligned with

shareholders

• A wider range of specialisms that have opened massive market opportunity

• Developing and delivery the right services in the right way and just where they are wanted

• An organisational model that is flexible, scalable and in a position to grow

• Free cash to facilitate growth and reduce net debt

• A track record of successful delivery

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